“Lucky” 7s for the Dow
The market was down big today with the Dow down over 777 points. However, people are missing the real point in the financial meltdown. It’s not about where we’ve been, but where we are going. There is plenty of blame to go around. Sprinkle some of it on the greedy Wall Street execs who got involved in this mess to pump up their profits, options, and pay. Put some of it on Congressmen…paging Barney Frank…who turned the issuance of mortgages into a social engineering experiment. He and others erased traditional mortgage practices, like requiring a down payment, by having Fannie and Freddie create a market for toxic mortgages. And then last, but certainly not least, are the buyers who thought house values never fell and that interest rates never went up. Caveat emptor, my friends.
But all that pales in comparison to where we might be heading. How much more capital will be wiped out before someone provides us with some leadership on this issue? Will Barack “I can’t postpone the debate” Obama step forward to save us from a depression? Remember, Barack said he was monitoring it very closely by phone. I guess that wasn’t enough to get the 95 Democrats support who voted against the bill.
And don’t even get me started with Pelosi. She lost the support of 40% of her party. That’s staggering. Then she has the temerity to blame the minority party because she couldn’t craft a bill that Democrats could support. By way of comparison, 133 Republicans went against the bill, but our lying liberal media covers that up the actual closeness by saying “the majority of Democrats” voted for it. Supposedly, Nancy, you are in-charge for a reason. You have the levers of Congress and enough votes to pass anything you want. Enough whining about why the minority party couldn’t bail you out.
Unfortunately, House Republicans don’t get a pass here. If you have an alternate plan, speak up. This isn’t the time to be sitting on your hands poking holes in everyone else’s plan. Those are real jobs, 401Ks, and homes people are losing. If we get double digit unemployment and Dow 5000, your principled stand against market intervention and concern over protecting the taxpayers will play just about as well Smoot-Hawley Act did in 1929.
Sadly, the two people taking a drubbing in the media also have the least blame. Bush and McCain knew this was serious. Both tried to bring the parties together, and were ridiculed. Democrats blamed a lack of regulation, which was clearly an attempt to deflect their responsibility in fomenting the crisis. The media and Democrats piled on McCain by saying he was running from the debate when he suggested that something needed to be done. Now they’re saying he blew up the deal although he was clearly the only candidate who understood the serious nature of what we are facing. Talk about damned if you do, damned if you don’t. And of course, through it all, the media steadfastly refuses to examine the role that’s continuing to be played by the Freddie and Fannie CEOs in Obama’s campaign. You just can’t make this stuff up.
Overall, Paulson’s plan wasn’t bad. Bill Gross offered to value the toxic mortgage debt for the Treasury free of charge. There aren’t too many people more qualified to do so. But lower we head and where we stop nobody knows.
Update: Here’s Pelosi right before the “bi-partisan” vote on the bill today. Sounds like she was really trying to reach across the aisle, eh?
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September 29, 2008 at 6:58 pm | Trackback
8 comments
Pelosi isn’t in any hurry to complete the deal, and two reasons present themselves. Either she expects some kind of financial calamity, which will enhance her party’s chances, or she thinks that nothing will happen, and Bush is wrong again.
What happens if nothing is done?
I can certainly see that case for Pelosi sabotaging the deal. Her pre-vote partisan speech certainly didn’t help. And I don’t care what she says, but when you lose 40% of your own party, it’s evident you didn’t do a lot of arm twisting to get this thing done. I’m sure the Democrats canvassed their members and anybody in a tight race or where the “bailout” was highly unpopular got a pass. She pulled this same stunt during the amnesty debate and then blamed Bush because he couldn’t find enough Republicans to fall on their swords to protect House Democrats.
Right now, I think an even bigger problem than the toxic debt looms–lack of confidence. When people don’t feel confident, they stop spending, investing, and fueling growth. They go on bank runs and start stuffing money into their mattresses. Ditto for businesses who stop hiring, investing, and planning for growth.
And to add fuel to the fire, we’re poised to elect a guy who has never lead anything larger than his own campaign whose natural instincts–tax and spend–are exactly what you don’t want in an environment where you have to restore confidence.
We’re in a pickle. No doubt about it.
They’re not listening and this cork’s gonna blow. They are two candidates and we are millions of people. We watch their lips move as they stand in front of us . One is selling used cars without a lemon law and the other offers castor oil.
It’s the People, stupid! We’re losing jobs, healthcare, some of us can’t buy gas cause there just ain’t none in the pump and winter blows in right after we buy the used car or swallow the castor oil and we know nothings gonna change …..for us. We’re sick of being dependant but if we choose to take care of ourselves by opening our own businesses face government hurdle after government hurdle to the point of zero advantage and then find we get to bail out millionaires.
Just get out of our way!
I’m gonna start counting backwards from 10.
The DOW is up over 400 points, the rest of the indexes are up also. So tell me again how this is going to plunge the markets into a tailspin!
Congress knows they are hanging out there for all to see. They want to look like saviors not causes.
Keep pressuring for no votes, let the ones that played, pay. Banks that stayed clean are lending money; companies with good balance sheets can borrow. Credit is available to the creditworthy.
For a bunch of clowns that accused Bush of rushing to war which took 9 months, what is the rush to fix this “adjustment?”
Bankruptcy removes the fools and owners, it replaces them with fresh blood and allows these companies to start up anew.
From the ashes rises the Phoenix.
I’m not sure I agree, Ed. The markets are forward looking institutions. Today’s rally is based upon the expectation of a bailout on Thursday–the old buy the rumor and sell the news proverb. What happens when it becomes apparent that the bailout isn’t coming?
And honestly, I’m not sure the bailout will come. It seems like everyone I talk to is vehemently against it. That’s pretty toxic this close to the election, and I think Pelosi burnt too many bridges. Today, I saw an article saying she reached out to Bush. What the hell for? He’s not running for anything, and nobody on the Hill cares what he wants.
Hope you’re right, but I think there’s still a problem. Going down 800 one day and rallying for 400 the next is still a net loss, and the overall trend is down. I’d certainly use this rally to diversify, which is something everyone’s portfolio needs in up and down markets.
The European markets are tipping over, too, with Western govts calling upon the US to set things right. Again. Of course, we sold them junk this time.
If nothing else at all, this financial fiasco has done at least one thing…..identify and solidify the old “silent majority”…and how ironic is it that there just might be less dividing people politically than politicians have had us believing, all this cursed while!
Certainly provides pause to re-evaluate the blind expectations which we granted this Congressional herd.
Look at the Asian outfits buying stakes in the good banking companies. Also the solid companies (with good cash flow on the sheets are not going anywhere) like Exxon, Dupont, Pepisco, Pfizer, Stryker, Zimmer, you want more names, will be here and prosper. The stock will go up and down; the value will remain.
Can you get a mortgage today? You better believe you can. My friend the Woodchuck just prequaled for a 15 year 15% down no points at 5.75%. He’s a geezer to boot. That’s from a local bank.
This is all scare crap to panic you into leaping and not looking.
As that peckerwood Barney Frank said, ” We’re standing on the edge of an abyss.”
Barney! Tenhut! Forward March!